Volunteers of America: Lessons from the New Contract Army

I was a-rockin' and a-boppin' and a-gettin' the breaks
The girls all said that I had what it takes…
But then one day my Uncle Sam
Said [knock knock] here I am
Uncle Sam needs you, boy…
Take this rifle, son
Gimme that guitar.**

"Economics predicts that the need to hire soldiers changes the incentives facing politicians to commit America to war. All other things equal, we would expect the need to hire soldiers will reduce the amount of war."

For almost any male born in the United States before, say, 1954, the specter of the draft cast a pall. Every teenage boy worried about compulsory military service, and schemed to avoid it or at least mitigate its consequences.

Today, of course, contracts have replaced conscription. If the government wants labor resources, it must hire them, not take them. Many of those hired are now toiling in Iraq, in the most serious test yet of what having a volunteer army means. This transition from draftees to volunteers removes the anxiety felt by the average 18-year-old. But the impact goes well beyond the changes felt by those who serve. There are interesting issues in the transition as well for those who do not serve.

First, contracting for labor in the military market is no different from contracting in labor markets generally, with one important exception. In a private labor market, prices adjust to clear the market as demand for labor rises or falls. But the purchaser of military labor is Uncle Sam. And prices for what Sam wants are not set in markets, but in Congress. When a private business can't attract enough workers, it often raises wages. The Pentagon has to get Congress to do that. And so the Pentagon, facing considerable shortfalls in new enlistments, has contemplated asking Congress to double the signing bonuses for recruits. So far, however, nothing is happening on the price front.1

But there are other ways besides pay to make enlisting more attractive. A second lesson from the current military-recruitment shortfall is the availability of non-price ways to clear markets. For example, in lieu of higher pay an employer could reduce the amount of time worked at the current wage, perhaps by increasing the amount of vacation time. And so it works in the military labor market. Given the inability to raise the prices they can offer, the armed forces have responded lately with offers of lower quantity (fewer months of service) for the same price.

As interesting as these supply-and-demand points about government contracting for labor are, more subtle lessons can also be learned from our experience with a volunteer army. Being forced to rely on volunteers alters completely the way in which politicians and bureaucrats have to think about warfare in the first place. Economics predicts that the need to hire soldiers changes the incentives facing politicians to commit America to war. All other things equal, we would expect the need to hire soldiers will reduce the amount of war.

Many wars are unavoidable. Pearl Harbor left America no choice about fighting Japan, and Hitler's declaration of war against the United States thereafter meant that we would be fighting Germany as well. But many wars are not ineluctable. Certainly the current conflict in Iraq was a matter of choice, not necessity.

If a country chooses to fight when it does not have to, citizens will disagree on the wisdom of fighting. Fewer men will see any necessity for military service, and so will have to be paid more to enlist. At the margin, getting (paying for) more war means having to give up more of something else. The very cost of raising a volunteer army thus acts as a deterrent to having such wars in the first place. The more controversial the war, the higher the budgetary costs of a volunteer army compared to a war that can be staffed by conscripts.

For more on the economics of conscription, a volunteer army, and the Vietnam War, see "Conscription," by Christopher Jehn in the Concise Encyclopedia of Economics. See also article on "Benefit-Cost Analysis," by Paul R. Portney.

Having a contracted-for army also makes it less likely that politicians will use war to further their own aims at the expense of the citizenry whose welfare they are supposed to advance. Choosing to fight creates the possibility that the decision will be driven by politicians' personal agendas, not any military necessity. A generation ago, Lyndon Johnson could put a half million troops into Vietnam, in a highly controversial war, just by conscripting them. As we now know, Johnson realized the war could not be won long before the bulk of troops were sent to Vietnam. But he soldiered on, escalating the number of military because he feared that backing down would provide electoral fodder to the Republicans, preventing him from achieving the domestic goals in his Great Society programs and exposing Democrats to charges of being "soft on communism". And so the government continued to draft men and send them off to a foreign war that the Commander-in-Chief himself believed hopeless.

It is highly unlikely that Vietnam would have happened without conscription. Not enough men would have enlisted voluntarily at the going wage. As the saying at the time went, "What if they held a war and nobody came?" Of course, wages could have been raised sufficiently, but the cost would have been astronomical, again cutting into Johnson's domestic agenda.

In other words, heads of state generally like conscription, as it allows them to pursue their personal goals with cheap labor. But for conscription, Napoleon could never have found the over half a million men he sent into Russia in 1812. Having conquered much of Europe, Napoleon was able to consign hundreds of thousands of non-French soldiers to the war, which naturally played well to his French constituency. The vaunted Grande Armée was labeled the "army of twenty tongues" in the rest of Europe as it advanced toward Moscow. Westphalians, Piemontese, Saxons. Portuguese, Walloons, Prussians, Dutchmen, Spaniards, Poles—all speaking their own languages—were conscripted as Napoleon set out to avenge perceived slights from Czar Alexander. Most of the conscripts died. And when the Grande Armée collapsed, Alexander grabbed many of the same soldiers and turned them around to fight his way into Paris.2

The Russian campaign resembled the Vietnam war in that Napoleon, like Lyndon Johnson, fought to maintain political power, not out of military necessity. Napoleon often spoke of how he, l'Empereur, could not bear the thought of losing a war, to the dismay of his generals who thought the Russian campaign should be abandoned before total disaster. He knew that once he lost, his reign would end—as it did as a result of the Russian disaster. Johnson knew he could not win in Vietnam, but his Democratic loyalties made him unable to break off the Vietnam war —until he too was forced to leave office. War was politically beneficial to both, despite the heavy costs in others' lives. And as long as soldiers could be drafted, neither man had to stop fighting.

Finally, the need to contract for an army establishes a sort of referendum on a war. At the moment, many interpret the fact that too few people are signing up for the military as indicating that the war in Iraq is unpopular—particularly among the group that bears the cost of fighting.

Napoleon famously remarked, "There are only two alternatives in this world: to command or to obey." In his world of massive conscription, this was true. When governments must contract for soldiers, however, citizens are given a third choice: "Neither of the above." Citizens' ability just to stay home, neither commanding nor obeying, has important incentive effects for politicians, and confers important blessings on those who would just say no to a war they do not believe is worth fighting.

In the American Civil War, both sides initially relied on volunteers because the war was relatively popular in both the North and the South. As the war dragged on it became less popular, and so both sides resorted to conscription for manpower. Ironically, conscription established a private labor market, as draftees in the North were allowed to buy their way out of the army by hiring substitutes (frequently recent immigrants).